January 28, 2013

India and Solar's New Normal

The Bloomberg Cleantech numbers for 2012 are in and the story is one we're by now familiar with -- small solar is a big deal. Despite a slight dip in overall clean tech investment, solar continues to dominate and the big area of growth was, you guessed it, distributed generation. That's because we've entered a new era of cheap PV where installations are up, total investment volumes down (as solar continues its inexorable price decline) and trade wars are expanding as countries fight for market share in tomorrow's technology. The problem is that India, with perhaps the largest potential of all emerging markets, hasn't even begun to adapt to this new normal. (click images to enlarge)

The most important reason to adapt is the speed with which it produces results. That's because small scale, localized deployment is agile and capable of growing rapidly. An attribute that large-scale centralized solar farms lack -- especially in India.

To understand how important the nimble nature of distributed solar can be to a country's market look at what happened in China. Facing an industry meltdown as global market turmoil increased (i.e. massive oversupply), trade wars expanded, and domestic manufacturers faced insolvency the government moved quickly to stimulate domestic demand. Beijing doubled the solar target for 2015 three times in just one year to an astounding 40 GW -- eight times the initial target. But most importantly, the centralization happy Chinese ensured distributed solar programs -- the Golden Sun and Solar Rooftop program – were in place.

My colleagues at NRDC have great advice for the Indian government that will encourage financing, domestic manufacturing, and deployment. To this must be added: go where the growth is. In a country with enormous peak load deficits, and 300-400 million off grid rural poor, policies that fail to incentivize and streamline distributed solar are a waste of time -- and money. What's worse, a lack of support for distributed generation threatens the entire market.

So to recap, distributed solar is the lone growing clean tech market and China is moving fast to take advantage to support domestic manufacturers. Distributed solar has fast results and in countries like India it has real social impact. India fails to adapt to this new normal at its own peril.

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